Apple In US Court Over Accusations Of Fixing Prices Of eBooks

Apple colluded with the world's top publishers to bump up the price of ebooks and cost consumers "hundreds of millions of dollars", a US court heard Monday.

At the start of what's expected to be a three-week antitrust trial, Department of Justice lawyer Lawrence Buterman argued Apple was determined to break Amazon's grip on the ebook market at the expense of consumers.

"Apple told publishers that Apple – and only Apple – could get prices up in their industry," he said during opening arguments.

The closely watched trial will review evidence from late Apple co-founder Steve Jobs and other Silicon Valley luminaries. Though the company does not face a fine, it could face damages in a separate trial by the state attorneys general if found guilty.

The outcome could shape what deals online retailers can make with content owners. The DoJ is seeking a block on Apple engaging in similar conduct in future. The company denies any wrongdoing and its lawyer dismissed the case as "bizarre".

In court Monday Buterman argued Apple rallied top publishers to fight off Amazon's $9.99 per book deal for new releases and bestsellers. They then used that deal with Apple to renegotiate with Amazon, threatening to pull titles if they did not get a better rate. Buterman said customers paid "hundreds of millions of dollars more than they would have," because of the agreement.

The five publishers have already settled with the DoJ. The trial judge has urged Apple to follow suit, after looking at evidence including emails from Steve Jobs to James Murdoch, then head of News Group-owned Harper Collins. Jobs, who died in 2011, told his biographer: "We told the publishers, 'We'll go to the agency model, where you set the price, and we get our 30% and yes, the customer pays a little more, but that's what you want anyway.'"

Apple is being represented by Orin Snyder, one of the US's top lawyers whose other clients have included Facebook and Bob Dylan. Snyder told the court Apple had done nothing wrong. He said the government was taking emails out of context to make "sinister inferences" and that Apple had fought hard with the publishers in negotiations.

"What the government wants to do is reverse engineer a conspiracy from a market effect," Snyder said.

Last week Apple chief executive Tim Cook insisted that he would not settle. "We're not going to sign something that says we did something we didn't do," he said. "And so we're going to fight."

According to the suit, filed in April 2012, Apple and the publishers set up an "agency" model, where they would set the retail price, from which Apple would keep a set percentage. Amazon, in contrast, bought wholesale and determined its own retail price.

District judge Denise Cote, who is hearing the case without a jury, urged the company to settle. She said in a hearing on 23 May: "I believe that the government will be able to show at trial direct evidence that Apple knowingly participated in and facilitated a conspiracy to raise prices of ebooks."

Snyder expressed concern about that comment in court. "All we want is a fair trial," he said. Cote said she made her comments based on hundreds of documents submitted in advance of trial and only after the Justice Department and Apple asked for her view. "The deck is not stacked against Apple unless the evidence stacks against Apple," Cote said.